As we enter 2025, Kiwis will be wondering what the property market holds for the next 12 months, and whether values will start to rebound on the back of some aggressive rate-cuts from the Reserve Bank of New Zealand.
As an experienced agency, we can see a mixed picture that’s going to be dominated by the confidence in New Zealand’s economy.
Like most Kiwis, we were surprised that the economy shrank 1% in the September quarter, which would explain why the central bank has been one of the most aggressive internationally in cutting interest rates to stimulate the economy.
Westpac Bank, tapping into the theme of our recent festive season, described the result as “coal in the stocking”.
It speculated the result may be revised, saying it reflected “the ongoing cooling in parts of the economy, along with some temporary factors that we don’t expect to be repeated”.
The Reserve Bank could be accused of sticking to a high cash rate – it held at 5.25% for many months – for too long. And this certainly frustrated homeowners and buyers, who found the cost of cash a significant impediment to stable property values and making a transaction.
However, last November the Reserve Bank dropped by 0.5% the Official Cash Rate (OCR) to 4.25%, making it one of the lowest rates among developed economies.
And our inflation rate has now been tamed and registered 2.2% for the third quarter of last year – that’s the lowest result since March 2021.
But are these numbers enough to herald a return to better times for the property market?
The industry researcher, CoreLogic, is taking an each-way bet.
It says the impact of lower interest rates will be dampened by the recent debt-to-income ratio that banks must now implement to ensure buyers don’t get in over their heads.
However, CoreLogic believes the Kiwi market will put in a respectable if not spectacular performance this year.
Sales volumes might increase by up to 15% while values could rise 5%. Such a result would mark steady progress for our market.
Last November, we experienced year-on-year growth of 9% for property sales.
There are now more than 30,000 properties for sale across New Zealand, according to CoreLogic. That’s a significant supply for our market, and it could herald excellent buying over the next 12 months.
First-time buyers, sensing a prolonged period of lower interest rates, made 22.5% of property purchases, according to CoreLogic’s November numbers.
For sellers, this can be a tricky time. So, our agents are making these recommendations:
Acknowledge Reality: Don’t ignore the economic climate: Pretending everything is fine won’t resonate with buyers.
Five-Star Presentation: Stage your property impeccably: First impressions are crucial. Invest in professional staging to showcase the property’s best features and create an emotional connection with buyers.
Make It Easy: High-quality photography and virtual tours will help buyers to visualise themselves in the property with professional photos and immersive virtual tours.
Pricing Realistically: Overpricing can lead to a property languishing unsold. Research recent comparable sales and price competitively.
Be Flexible: Buyers may have more leverage, so be flexible on price and terms.
Focus on strengths: Emphasise features that offer value and security, such as energy efficiency and low maintenance.